Navigating the Proposed New NAR Buyer Commission Rules

  Recently, the National Association of Realtors (NAR) introduced proposed new buyer commission rules, sparking discussions and curiosity among real estate professionals and clients alike.  

  These rules would preserve cooperative compensation or concessions from the Seller, which can be used to compensate the Buyer’s agent, as long as such offers occur off of the MLS. It would also require MLS participants working with Buyers to enter into written agreements with their Buyers before the Buyer tours a home.

 Unfortunately, it has also left some Buyers with the belief they can “go it alone” saving what the Seller’s agent has traditionally split with the Buyer’s agent. Commissions, by the way, have always been negotiable. However, the saying “caveat emptor” for Buyer beware, has never been more on point than with the likely most significant transaction in a person’s life.  

Why Buyers Still Should Have an Experienced Buyer's Agent

  In an era where information is readily available at our fingertips, you might wonder if the role of a buyer's agent is still necessary.  

  Finding a home is a Functionary role and as noted can be done in numerous ways whereas a Realtor® has a Fiduciary role to their client. A Fiduciary is one of the most sacred roles under the law. In Real Estate it includes obedience, loyalty, disclosure, confidentiality, accounting, care, and diligence. All attributes that help you navigate the often hundreds of document pages that take place from crafting an offer through closing the transaction.  In the intricate world of luxury real estate, especially in Los Angeles area premium neighborhoods, having an experienced buyer's agent by your side can make all the difference.

  First and foremost, navigating the high-stakes market of luxury homes requires specialized knowledge and expertise. From understanding neighborhood dynamics and market trends to negotiating complex contracts, a seasoned buyer's agent brings invaluable insight to the table.

  Furthermore, in a competitive market like Brentwood, Beverly Hills, and Malibu, where Leonard Rabinowitz specializes, multiple offers are common, having a dedicated advocate can give you a significant edge. A skilled buyer's agent not only helps you find the perfect property, sometimes before they hit public websites and some that are not on public websites, but also devises strategic approaches to make your offer stand out among the rest.

  Moreover, the home-buying journey can be daunting, especially for high-net-worth individuals seeking discretion and personalized service. A reputable buyer's agent not only respects your privacy but also provides tailored guidance every step of the way, ensuring a seamless and stress-free experience.

  I recently heard a significant Brentwood agent bragging about an unrepresented buyer that thought they were saving 2%.  In fact, his client would have taken a lower price and participated in the findings within the inspection report which this buyer never asked for. The buyer saved 2% but lost out on 6% of savings on a very expensive estate.

  In essence, while the real estate landscape continues to evolve, the role of an experienced buyer's agent remains indispensable, particularly in the luxury segment. From navigating complex transactions to providing unparalleled expertise and advocacy, their presence is an invaluable asset in your quest for the perfect home. So, when embarking on your next real estate journey, remember the importance of partnering with a trusted advisor who has your best interests at heart.  

About the author.  Leonard Rabinowitz, has advised buyers as well as built and sold numerous ultra-high end estates in Brentwood, Beverly Hills, Malibu, and Aspen. One of his previously constructed homes recently hit the market for $85 million and another, a record sale in California, in June 2024 sold for $210 million (See Story Here).  He is an associate broker and estates director at the Beverly Hills office of Christies International Real Estate So Cal.  

UPDATE: March 29, 2024:   Trade publication Inman is reporting two trade associations with a total of almost two million members have each filed powerful amicus briefs. Read the CMLS amicus brief here and the MLS Northwest amicus brief here.  In general they ask the Court to oppose efforts of the Antitrust Division (DOJ) to impose a policy preference on the U.S. residential real estate market that lacks empirical support, conflicts with principles of the Sherman Act, and has negative practical implications for consumers which DOJ has not taken into account,”  Read the (full Inman piece here).

UPDATE: April 4, 2024:  It has been reported that the U.S. Court of Appeals ruled the DOJ can reopen its investigation into the NAR.  The case is separate from lawsuits filed by home buyers and sellers, subject to the proposed NAR settlement discussed above. Previously, the DOJ and NAR agreed to a proposed settlement of the DOJ’s investigations in 2020, and the DOJ informed the NAR saying it had closed its investigation regarding two rules. However, after the Administration changed hands, the DOJ withdrew from the settlement in July 2021 and resumed its investigation into the rules.  The NAR had successfully asked a lower court to set aside the resumed investigation. That ruling was just overturned by the U.S. Court of Appeals in the District of Columbia.  Inman has the full story which you can read (Inman story here).

UPDATE: June 12, 2024:  MLS PIN, which operates in six New England states and New York, is standing firm against the Department of Justice's stance on a proposed settlement in the Nosalek antitrust commission case, arguing that the DOJ's proposed ban on commission offers from sellers to buyer brokers violates antitrust law and the First Amendment. They urge a district court to reject the DOJ's arguments and settlement, emphasizing that the DOJ's position exceeds the bounds of antitrust law and creates new challenges for MLS PIN.  It argues that For MLS PIN to ban home sellers from offering compensation to buyer brokers would be “a blatant restraint on trade much more severe than other MLS rules that have been struck down as anticompetitive”. Read the (Inman story here).  

UPDATE: August 14 2024:  The Wall Street Journal today published a piece describing upcoming changes to MLS rules and industry practices. Read the (WSJ story here)